House Hunting in ... Croatia

This three-bedroom two-bath villa, built in 1910 on Lapad Bay, part of the Adriatic Sea, is about a 30-minute walk from Dubrovnik’s Old Town. It has been owned by the same family for four generations. The 2,325-square-foot two-story stone home is on the Lapad Peninsula, one of the most expensive areas in Dubrovnik.

“The old aristocracy of Dubrovnik built their summer houses here,” said Vedrana Kelleher, the owner of Dream Estates Croatia, an associate of Savills, the international real estate company, which is listing the property. There are several large old villas on the hillside, which is covered with pine, cypress and palm trees. A public beach on Lapad Bay is a short walk from the house, and there is a walking path along the bay.

This home is on a private street, next door to a villa that is used as an art gallery. From the house there are views of Kolocep Island and the hills across the bay. The property, which is a little more than a quarter of an acre, has tiered gardens, including olive, orange and lemon trees and oleander and bougainvillea.

The house has a small reception area. From the entrance, white stone stairs lead up to the bedrooms, and a separate short flight of stairs leads down to the main living area. Many original elements remain from 1910, including the parquet floors in the living and dining rooms and bedrooms, as well as wooden doors, double windows and door handles. Ceramic ovens once used for heating are in the living room and in two of the bedrooms; there is now central heating. The house was renovated over an extended period starting in the 1990s, including a new roof and upgrades to the main kitchen and bathrooms, the owner said.

The living room, dining room and kitchen are in separate rooms on the ground floor. The dining room features a raised platform with windows overlooking the garden. There is a full bathroom with a bathtub adjacent to the dining room; the dining room has often been used as a bedroom, the owner said.

The kitchen features custom Italian cabinets and a small dining area. There is a door from the kitchen to the garden patio, which can also be reached from the living room.

The three bedrooms are upstairs, where there is also a separate kitchen. Two of the bedrooms have a private shower and sink; there is also a shared toilet. The three bedrooms have access to balconies with expansive views of the area.

The house includes a basement, currently used for storage, and a one-car garage. There is also an attic that is big enough to be converted into a bedroom, the owner said.

A supermarket, hotels, a post office and several restaurants are within walking distance of the house. Dubrovnik’s international airport is about a 30-minute drive.

MARKET OVERVIEW

Dubrovnik is the most expensive market in Croatia, agents say. Although prices fell as much as 30 percent after the 2008 global financial crisis, the market has stabilized in recent years.

“Anything well located and priced correctly is selling,” said Tim Coulson, the owner of First Property Croatia, a real estate company. “Supply is still very poor, with very little new development.”

Croatia joined the European Union in 2013, which has made it easier for Europeans to buy property. But the volume of sales is still very low compared with the peak years, agents say.

“Price expectation from vendors has become more realistic, but many are still unrealistic,” Mr. Coulson said. “A motivated seller with a good property will find a buyer.”

It is often difficult for buyers to find renovated, well-priced properties for sale, agents said. Homes with sea views or historic properties in the old part of the city are in demand, but there are few homes available, according to agents. Those that are available are often priced at peak levels.

“The typical Croatian seller prefers to wait 10 to 20 years, but not to sell his property 20 percent cheaper,” said Elena Nevskaya, a lead consultant with Adrionika Consultancy and Coordination, a Croatian real estate company.

WHO BUYS IN DUBROVNIK

During the boom years from 2000 to 2008, Dubrovnik was a popular market for buyers from Britain, Germany, Italy and, especially, Russia.

“During the 2000s the most active buyers were the Russians, who bought many seafront villas in the Dubrovnik area, pumping the prices,” Ms. Nevskaya said.

Today Russian buyers are rare, in the wake of a steep decline in the buying power of the ruble, agents say. And instead of buying homes as an investment, more international buyers are purchasing property as vacation homes, agents said.

“A lot of people are buying for lifestyle,” Ms. Kelleher said.

In recent years, English, Italian and Scandinavian buyers have started to return to the market, as well as Croatian buyers. “As the local economy improves, more Croatians are buying in to rent,” Mr. Coulson said.

BUYING BASICS

The buying process is easy for European Union residents, but more complicated for citizens of other countries. United States citizens have to apply for permission to register property based on reciprocity agreements, which vary from state to state.

The mechanics of buying a home follow basic E.U. guidelines. Buyers typically use an agent, escrow accounts are commonly used to secure deposits, and a publicly accessible database tracks title registrations.

One potential problem in Croatia: Families who lost their land during the political struggles of the former Yugoslavia may appear to challenge ownership of property. “Sometimes the owners of properties who were listed in registers, or whose grandparents were listed, prior to 1945 claim their ownership back,” Ms. Nevskaya said, noting the process can delay a sale, even if it is not successful.

Buyers should hire a lawyer to handle contracts, registration and the appropriate paperwork, agents said.

Fees and taxes can add about 10 percent to the purchase price of a home, including a 2 percent to 3 percent commission for the buyer’s agent and a 5 percent transfer tax, agents said. There is no capital gains tax on the sale of property in Croatia, as long as the home is held for at least three years. (The capital gains tax is 25 percent if it is sold before three years.) There is no annual property tax.